U.S. House of Representatives passes Federal Security in Bonding Act
Proposed legislation affecting construction bonds is closer to becoming law now that the U.S. House has passed it by voice vote. The Security in Bonding Act, also known as H.R. 3534, would change requirements related to assets bonding companies pledge when entering surety agreements.
Currently, government officials that require bonds have no authority to require that bonds be given through a guaranty corporation. The Act would extend government officials the right to do so, with the goal of protecting subcontractors and other bond claimants from potentially insufficient funds to cover claims. More specifically, the Act would also require individual sureties for federal construction projects to use only assets that can easily be liquidated to quickly fund valid claims. Sureties’ investments would be limited to low-risk assets to prevent unexpected decreases in assets that could lead to insufficient funds to cover bond claims. Additionally, the government would also have the option to hold assets pending resolution of claims.
The bill has been referred to the Senate’s Committee on Homeland Security and Governmental Affairs.
If you have any questions about this or other construction law topics please contact Caroline Lindsey, Associate Attorney with Anderson Jones, PLLC, at (919) 277-2541 or email,CLindsey@andersonandjones.com!